markets are moving as we speak. confronts financial failure. at the university of north carolina, nobody can fail on athletics. this is "bloomberg surveillance ." it is thursday, february 27th. joining me, scarlet fu and adam johnson. a very busy "surveillance" this morning. >> time for the morning brief. german unemployment falling for the third month. italy's 10 year bond drops -- thatdust below 3.5% is a good sign. spain's economy expanded 0.20% -- that was less than expected. durable goods orders and initial jobless claims. the kansas city fed

manufacturing coming up. a lot of earnings. janet yellen is expected to testify before the banking committee today. >> she gets a snow day every once in a while. let's get a data check. futures were up, now they are down. go right on to the next screen. these are the currency markets. yen abruptly moved on the crimean is. -- crimea news. ukraine currency is out of control. -- shows anruble so

injection as well. i am watching the japanese yen. strongerews flow, a yen. that is the place to go. buy it and sell everything else. >> we are still not below the 101 level. i would say, right now, it is the rate of change. the direction and the speed in which we're moving. the russian flag above parliament south of kiev in crimea, that is something i will say in the last two or three hours. here is scarlet fu with our front page. across thestory internet is violence in the ukraine shifting to crimea. gunmen took over parliament and other government buildings overnight, they raised the russian flag. about 120 gunmen.

has put thein military on alert and ordered military exercises. ukraines in the part of were russian is spoken. >> with all of the history 1954,ed going back to saying they will give crimea to the ukraine. 92, russia says come away to minute, independent ukraine, we need to have a force there. >> a lot of questions about whether ukraine might be split up eventually. >> crimea is a semi autonomous region in the ukraine. it does beg the question. we will be speaking about the interview with the acting prime minister. >> the ethnic structure here speaks volumes.

60% russian based in southern ukraine. tartar.0% it is a toxic mix. they call it a tinderbox. >> we are seeing an fire up right now certainly. we want to get to our second front-page story. this is something you highlighted yesterday. china's weaker yen. china's central bank has been engineering the drop of the yuan. it is part of the financial reforms. greater volatility, pushing for the currency to be a legitimate effect of currency in the world. that would make china less dependent on exports and investment. that is something the government is shifting away from for more domestic consumption. is whateal debate here

is share value for the you want -- yuan and the flow of capital around the world? we know where the u.s. senate stands on this. about itschumer talked cutting either way. letting it go up naturally. it has only been allowed to strengthen in a very small increment. >> they want to widen that. thehey are doing this with spotlight on russia and the ukraine right now. we will continue with that. our third story, we go back to banking. pushing its biggest annual loss since the bailout in 2008. 15 billion-dollar deficit for last year.

he calls rbs the industry's least trusted leader, does the ceo. >> the bank. the largest bailout in europe. still owns the vast majority of the bank and is still pulling the strings. >> by the way, wire pros playing in the olympics? >> that is what the nhl is asking -- the players love it. >> the players love it and flagwavers love it, i am not fair -- sure it is fair to college athletes. >> we need to go to the ukraine. we spoke with the new leadership to read good morning. >> good morning.

his name is arseniy yatsenyuk, the prime minister designate. inis about it -- to be voted as the interim prime minister of the country for the next few months. parliament is still chewing over this decision. >> how front and center is crimea to the management in kiev? >> very front and center. i was standing in the parliament here in kiev. meanwhile, in the crimea, the parliament had just been seized by a group of about 100 gunmen. i asked the prime minister about that and he said it is the first crisis he has to deal with and he will deal with it immediately. can, will do everything we everything possible, we will use all tools and legal means in order to stabilize the situation in crimea.

for three months, during the unrest on the streets, the worry was that some of the regions in the west of the country would secede because they did not like resident yanukovych and they did not like the russian influence and now we have the opposite situation. at this point, it is just a threat of these regions in the east and the south seceding. this new prime minister has an awful lot on his plate, hardly somebody that you would envy. he said he will be the least ever popular prime minister in this country. >> what will be the response of the united kingdom to what we have seen in the last 24 hours? >> they have been very clear that they are prepared to support ukraine in dealing with its financial problems. all of the nato countries are being very vocal that they expect russia to stay out of it militarily.

i think the real issue here is to what extent is the west going to open its wallet? we heard the u.s. say they will pony up $1 billion in loan guarantees. ukraine needs $35 billion. they have $34 billion to go and collection. -- it will beyuk his job to find the cash. >> thank you so much. that important interview. you can see that in its entirety at bloomberg.com. >> we are joined by our guest host, the head of the global research at the guggenheim partners. also the global strategist at barclays. this is right up your wheelhouse. the factou make of that it is so fluid in the ukraine from hour to hour? >> i don't think that is very surprising.

i think the russian angle is what scares people right now. no one expects russian intervention right now. but with the military exercises yesterday, what happened in georgia, that is always in the back of people's minds. isgiven the fact that there a majority of people of russian ethnicity in crimea, would you expect russia to come to their defense? >> the russians are coming off a pretty successful olympics. i do not think they want to provoke the type of international incident. but it is very fluid. there would be pressure for russians to come to the defense over the russian speaking population. the black sea fleet is going to be a big issue. >> scarlet, you have some important breaking news.

>> we just got results from sears. $3.30 per share. revenues are in line with estimates. sales are down 6.4%. other company news. set to report. the annual report could be released this saturday. lego topping its rivals in asia. rose by theo single digits in the u.s. and europe and double digits elsewhere. don't take jamie dimon lightly.

a j.p. morgan spokesman says he was saying that market volume is unpredictable at times like the weather. that is today's company news. we are focused on what happened overnight in crimea. >> we certainly are. >> that leads us to our twitter question. as vladimir putin part of the solution, part of the problem, how does he fit into the puzzle? tweet us. this is "bloomberg surveillance ." we will be right back with more. ♪

>> good morning, everyone. "bloomberg surveillance."

the markets get a bit off what we have seen in recent hours. the yen is trying to capture a bid to be a weaker yuan for a flight to quality. here is the latest headline. russia builds up baltic sea presence. that is not near ukraine. that is some more up to the northwest of russia. over scandinavia as well. >> we want to talk about a couple of retailers that are in turnaround mode internally. sears holdings reporting this morning. $3.37 per share. jcpenney reported result yesterday -- they give a forecast in sales that seemed to

signal a little but of turnaround. let's bring in craig johnson, the president of customer growth partners, which offers strategic counseling into retail and consumer service sectors. to these latest report cards from sears and jcpenney change the story on their turnaround efforts? here is a real mixed bag of stories. jcpenney has been in intensive care and at least the doctors are showing up and they are making slow but steady progress against getting out of a deep hole. with sears, you have a grand old name in american retailer and it is heading downhill and nobody is stepping on the brakes. it has been a stunning debacle. the latest numbers today were not a huge surprise. >> i guess the backdrop is that

we live in a bifurcated america. the middle class is getting squeezed. what happens as their core customers are disappearing? >> the customers are still there. they are just shopping at different places. are brandsd sears that are still deeply rooted in the past. jcpenney underwent an unfortunate transformation two years ago under prior management that alienated the core customers. side are the kmart brands rooted firmly in the 1980's if not the 1960's and they do not reflect the way people like to shop today. >> if i look at the forward estimates for sears, losses are forecast every quarter out to 2015. where should we as investors

follow the people who are not going to sears? >> they have lost a customer base in a number of directions. for folks in the mall, the macy's is still doing fine. there is little upmarket. most of these players are losing to some of the newer formats moving off the mall. on a macro basis, you go back 25 years ago and department store said 80% of the retail market. now it is down to 2%. they're going to tj's and ross. they are going to walmart, target. they are lost and very heavily. we see those reflected in the numbers. craig johnson joining us over the phone. are the mostsears shorted department stores. >> they are not making any

money. they have lost the customer. on the cover of the new "bloomberg businessweek." the big scandal behind college athletics. this is "bloomberg surveillance ." >> great cover. that is the kind of grade i got. >> we have all been there. >> this is bloomberg television, streaming live. we will be back. ♪

>> it is a less smoky independence square in kiev. crimea, where in

the soviet black fleet is. keene. with me, adam johnson and scarlet who. -- fu. >> unemployment in germany falls for the third straight month. the drop leaves germany's unemployment rate unchanged at 6.8%. arizona's governor vetoes a bill after an outcry. the bill allowed business owners to refuse based -- service based on their religious beliefs. major corporations opposed it and some companies threatened to relocate out of arizona. it looks like about not become law. major changes in store for food labels. calorie counts will be required to be in large type. >> what?

now i can see them? >> are they actually going to -- calories know how many were in munchkins, you would not eat them, not even you tom. sugar and you name it. beware of what you eat. >> good morning, everyone. scarlet who gets us started. -- fu gets us started. >> it is too early to evaluate president obama's presidency.

does the market see things this way? >> i think so. since october until now, from an investment standpoint, congress and the president has stepped out of the way. the fact that we have a nuptial budget, there was not a face-off on the debt limit this time, there was a small amount of bipartisanship -- i think it is important for us as investors. >> how does a president become lame duck? is there a moment? >> i think the minute he is reelected he becomes a lame duck. he is already a lame duck. >> is that what we are already talking infrastructure? >> there is nothing new here and i don't think we will see a lot

new from an investment standpoint. i don't think the infrastructure proposal will go anywhere. i don't see a lot of prospects there. >> thank you. for world-class opinion and a wide array of business, for politics, cultural topics. we will be right back with more. ♪

>> good morning, everyone. "bloomberg surveillance." scarlet and adam with me this morning. let's get a quick data check.

i want to show you the ukrainian currency. everything moving. the 10 year yield in the u.s. the tension is out there. here is the tension in the ukraine. it is a hockey stick. the nhl coming back. massively week ukrainian. we have blown through that this morning. michael mckee is in charge of currency pronunciation. >> the h is silent. >> here is scarlet with our gainers and losers. >> abercrombie & fitch rising more than 11% after profits topped estimates. they bought back $150 million worth of shares. target rose by more than 7%. the biggest gain since 2009.

it is beginning to bounce back from the data breach over the holidays. sears and jcpenney reported this morning. retail. a mixed bag on make easy to sit here and big pronouncements about retail and the american consumer. you have to dig down. what do we have on crimea? >> very much so. it little history lesson. it is a peninsula of 1.9 million people and extends out into the black sea. it is part of ukraine. overnight, 120 militants took over the parliament building and raised a russian flag. croft is with us.

>> spy. >> geopolitical strategist. why has crimea become the latest flashpoint? >> this is something that everyone was very concerned about. a russian speaking population. the concern was that with yanukovych john, were you going to have the russian speaking population feel under siege and call for russia to come in on their behalf? some are saying they want to rejoin russia. big flashpoint for the european union and the united states. thee were talking about sphere of influence that russia is trying to protect. this has been a long-term story. >> this goes back to george kennan and international relations. are we trying to redo the soviet bloc

? does mr. putin just want a russian bloc? >> they believe that there is a western effort to break apart the sphere of influence. >> why isn't oil moved? >> there was no oil at risk. they are concerned about a potential gas cut off. so much of the pipeline goes through the ukraine and there was a concern that russia would shut off the flow of gas to russia through the ukraine. that was a big concern. this time, no one is thinking that is going to be the russian play. it is not in their interest to do this. that is something you always have to watch. >> i would say that the weapon they are likely to use -- i

think shutting off the gas weapon theyld be a would use. georgia-crimea equivalent? >> that is what is in the back of people's minds. would you have a situation? that is why john kerry and u.s. officials are telling russian officials to stand down and reminding them of what the russians said about libya. you told us not to going to libya, you should stand down on the situation. ramificationsge with regard to syria. >> this is a question of sphere of influence. you have a situation. are you going to double down on your other remaining ally if you lose crimea? >this is strategic.

these are military bases. they do not want to lose allies. they are going to throw a lot behind assad right now. >> here is my morning russ street -- must read this morning. a really smart essay. putin is looking west. now --e is a discussion is china the market for russian gas? things that he is not going to cut off the gas to europe is that he does not want to lose markets. >> great conversation. how does this play in washington? >> it is fascinating.

takes a lot of pressure off the economy in the u.s.. you do not have to worry about rates rocketing up. >> people by u.s. bonds. >> exactly. >> should i take my shoe off and pound the table? that is where we are. >> fascinating. >> this is a conversation that is just beginning. we will take a look at the domestic politics in washington and what the president is doing with regard to infrastructure. our twitter question of the day -- is vladimir putin part of the solution or problem? >> did constantine come up with a question? >> with a name like constantine. also coming up in the next hour, a fake classes scandal at unc chapel hill.

coming up. ♪

>> good morning. markets on the move. news in the crimea.

credit bonds, lower yields, higher notes in bond prices. people assess what is going on in the southern ukraine. adam johnson has our top headlines. consumer andf executive sentiment rose to the highest level in the euro area. this eases pressure on the european central banks. sayshinese president pollution is the biggest problem. the pictures that you see daily are absolutely incredible. it is the most prominent problem that beijing faces. seven straight days of hazardous levels.

venezuela hasin declared tomorrow and national holiday. extend the holiday and the president hopes it will diffuse tension. >> i think it would be front and center if ukraine was not front and center. we are sliding venezuela in our news report. we will have to rectify that sooner. >> ardor version is on college basketball. -- are diversion is on college basketball. shows men's college basketball revenue. louisville is the top. in total, six teams with more than $20 million.

louisville's financial success is largely tied to the publicly funded center. the luxury suites lease at up to $92,000 annually. >> college basketball is big business and the business can bring big scandal. the fake classes issue at the university of north carolina chapel hill. is the scandal bigger than unc? >> of course. it is just one slice of life in ncaa inc. more broadly. how this $16ain billion national industry operates. the problem is that you are taking people who are very talented athletes, bringing them to these university campuses, and they do not necessarily have

the academic skills to match their athletic skills. >> i am shocked. round up the usual suspects. is anybody shocked? >> people should be shocked. the university of north carolina is one of our most prestigious public institutions. famous peopleld in the humanities, sciences. whether or not you think it should be the host for a major entertainment business, it is certainly thought of as a leading education and research institution. if you are not shocked, you are not attuned to what is going on. texas's football program generates the most revenue. $103 million. the tail end of it, you have ice hockey and golf.

when it comes to the student athletes that are not performing, you are talking about a small slice of them. are notof the sports growing concerns as businesses. are the and basketball concerns. those are the revenue sports. that is where the vast majority of the industry comes from. with us some of the most egregious examples of what has happened? >> this brings us back to chapel hill. there have been all kind of scandals over the year. unc is not unique. you had tutors writing papers for football players. people taking tests for basketball players. corruption had the of an entire academic department which was offering fake classes. lecture classes that never met. >> that was like thermodynamics

and engineering. >> theoretical physics. what is really poignant here and is not suitable for humor is that this was the black studies department. the department that was corrupted was the department that was devoted to the study of african-american culture and african history. the students being channeled into this course were varsity basketball and football players and that body of students was disproportionate african-americans. >> what has been the response of the institution? >> the article has just come see what theill responses. the institution has sadly been resistant to calls to investigate more deeply.

with the prospect of our article coming up, the unc did bring in , aeavy duty outside lawyer former very senior national security and justice department official. he has been given the mission to lead a truly independent investigation. it is possible that we will get to the bottom of this thing. is the debate on whether we should be paying student athletes? >> this connects to that other very important debate. the ncaa postured additional has been we do not pay student athletes because they're compensated with scholarships and a four-year education. however, if that education is an empty promise, as it has been for many athletes, then the equation crumbles and you are not compensating them. >> it is a bankrupt system. these athletes are being done a horrible disservice. >> the ones who did not go onto

a professional career. you could argue that someone who goes on to a multimillion dollar career -- >> one in 250 if you are lucky. talentedhe many athletes do not have a career in the future. they you anticipate that could be banned and they would miss march madness? won the ncaa tournament in 2000 five and 2000 nine, members of those two championship basketball teams were enrolled in some of these classes. the question is, will the ncaa determined that some of those players would not have been academically eligible but for the fraudulent classes and then you raise the question about whether they get to keep the championships. >> congratulations on a moving article. the cover this week. look for that. "bloomberg businessweek." obamaing up, president

signs to pour millions of dollars into infrastructure and development. that is coming up next. ♪

>> this is "bloomberg surveillance." scientific discovery in recent days. >> this is really cool. apparently our galaxy is more crowded than without. nasa has discovered 715 more planets. >> i don't believe it. >> it is the biggest single discovery of planets in history. would practically double the number of planets that we know about. >> really? >> they were discovered by that space vehicle that is hovering out there. it is orbiting 305 different stars. >> looks go to the "surveillance" solar system. bruce willis is out here. >> is that a good thing? rule --is, stephanie

comet stephanie rule. hle. it was named in the 16th century. >> do you see that bright sun? >> that is tom. earth, the president has a plan to shorten your commute. >> it is a political longshot. our guest host is with guggenheim partners. it is a bridge too far. we cannot get anything done.

i think there are other forces at play that could make the situation better. if federally funded infrastructure program is a nonstarter. you are not going to raise the gas tax, you are not going to restructure the corporate tax code in the near future. but if oil prices can stay where they are or go up a little bit and can fund the development of a lot of energy infrastructure, that will drive road, rail, and other transportation infrastructure we're talking about. you need a private sector impetus. dry?sentially the pot is the piggy bank is empty? >> it pretty much is. highway funding is done. vehicle miles traveled have been dropping.

gas tax revenues are falling. the need for a public-private partnership. you have private money coupled with public management. why can't we get that done? >> that does happen. but the economic incentive has to be there. we start natural gas exports and crude oil exports. the prices equalize between the center of the u.s. where the crude oil piles up in barrels and the rest of the world -- you can have it better environment for private investment and international energy agency's have estimated that it is in the trillions of dollars, the infrastructure investment, to man come in to develop our resources of energy in the u.s.. do investors look at

president obama's infrastructure proposal with any degree of belief or is it something that they say it has been proposed, we will write it off? are looking at all of these intersections all of the time. about hownking a lot frompolicy in washington, the fed to defense spending, affect the markets? , you your hope and prayer are the queen of a higher oil price and you got it right. does it drive higher here? libya -- their production is out. if they cannot get the barrels back on, we will be in a higher priced situation. you need to watch the iraqi elections coming up in april. one thing to watch in the downside is the iranian nuclear negotiation. to the the risks are

upside in terms of geopolitics. >> i want to bring it back to janet yellen testifying later today. what do you expect to hear from her that might move the markets? >> the markets want to hear whether this soft patch in the economic data cause the fed to change its view about the tapering program? well upon us or close down the tapering program? that is unlikely. the march meeting is probably too early. by the end of april, probably too late. that is going to be the focus. what will she say about the tapering? >> thank you so much. , not as exciting as it was two hours ago. morning on a tear this -- yen on a tear this morning. .he ukrainian currency

u.s. dollar and ruble weaker. usrobert kaplan joining

>> this is "bloomberg

surveillance." >> armed forces in crummy at russian flag as the foreign minister pushes for urgent talks with russia. confronts financial failure, a data recovery. , investors whohn are out of sight and out of mind. us on thisor joining thursday, february 27. i am tom keene. arelet fu and adam johnson our guests. robert kaplan of the business school of management -- as we look at leadership and what you are meant to do as well. a busy morning. here is adam johnson. >> german unemployment fell for a fourth month in february as growth picks up. italy's 10 year yield drops for the first time -- drops below 10% for the first time since

2006, and germany's economy expanded less than expected. we have durable goods orders and jobless claims in the united states, and finally at 11:00, the kansas city fed manufacturing activity. earnings is all about the consumer. , and gas.uy is coal will be testifying to make up for the snow day. out,th the headlines first 240 of 250 parliament members in the ukraine form a coalition, there is some of that in kiev. not do that last weekend but best buy just reported results, revenue up $14.5 billion. this is above what they wanted, $7 billion, and the share was one dollar higher -- >> is is curious because sales were disappointed, coming in at

eight percent for best buy. they expected them in the mid-single digits. this was about competing with amazon. that is what they had to do, compete with amazon on price. >> it is reasonable that total revenue will be slightly negative in the first half of the fiscal year. let's look at the headlines, rbs reporting the biggest yearly loss since the bailout. they launched billions of dollars worth of legal costs and impairments last year. they were bailed out by the government in 2008. a drop in holiday sales affects sears, posting a loss of $358 million. sales dropped in lines with -- in line with analysts estimates. this is after online operations and a rewards program failed to produce sales. berkshire hathaway will report a record annual profit, this was

worth at least $18 billion last year. this would easily shatter the previous high of $15 billion set the year before. the annual report will be released on saturday. >> the market moving we have seen, risk is off to silently as rimera -- the history crimea, kruschev gives to the ukraine, with crimea separate with the russian fleet, that is where the tension is. you get us started. >> brian, who is based in europe, spoke with the leader of the ukraine to find out what is especially. crimea,

>> we are committed and we will do everything that we can, everything possible and we will use all tools and legal means in order to symbolize the situation. asthis is happening in kiev the violence is unfolding in crimea. other things as well. >> there are 120 armed gunmen who have taken the capitol building in crimea, they are russian supporters and russians dominate crimea. but the regional head of the department has threatened to cordon off the block and says, they have occupied it that we will contain them. >> a fluid situation. the interim prime minister said that russia would never use force in hopes that they could be a real partner. >> we want russia to be the real partner, and we want russia to have transparency and fair relations with the ukraine, and

to speak to our multilateral and negotiations. >> that was the prime minister of the ukraine. ryan joins us. >> let's go to him. what will be the european response to what we have seen, how do that shot brussels responded to the headline on ?ussia's actions >> we have heard from western european generals, words of caution not to intervene, militarily in the ukraine. and really not to disturb the situation. it is important to point out that this group of gunmen who seized the parliament building in crimea at 5:00 in the morning, they raise the russian flag but this did not have anything to do with the russian state. they may be ethnic russians from

the region. but on the russian side of the border, you have russia holding military exercises -- >> what will you look for early in the day? minister designate is expected to be voted in as the countries prime minister at any moment now. i think that what we really need to pay attention to is how the sky is going to raise $34 million. that is what they need to cover their liability for the next few years. this is not really too much money -- this is the guy who will have to cut the deal with the imf. he says he thinks they can avoid default, a haircut, maybe. it depends on the imf. this is the most unpopular prime minister ever because what he does -- whatever he does will not go down well in the country.

>> thank you so much, in kiev. we have a great lineup for you, robert kaplan, ken feinberg, who you know for his public service, it is helenas -- -- overcome by events, what are the events that can overcome u.s. foreign policy echo >> if you have any kind of violence against the russian speaking , this is, crimea something they would be about in triggering intervention. it does not look like they would want to go in but if you have -- thing happen there, >> what do you observe in a leadership actresses of mr.

pruden? >> he knows when to involve -- food and -- mr. putin? >> he knows when to involve himself in when to stand back. he has a lot of experience and he will watch this trigger event. he is a very experienced leader who will be able to avoid this confrontation. >> i look at your service with ted kennedy years ago in massachusetts. is the makeup of your washington, now, able to look at the foreign-policy crisis with the same perspective or a better perspective than 30 years ago? washington, what i see and what most american people see is that there is not a lot of confidence, that there should be the kind of bipartisan foreign-policy that was so important over -- after the second world war. >> do you see this as crimea --

>> my grandmother would be surprised. but he is very convincing. >> you know washington inside and out and you are an analyst at the cia, why are they so quiet about this? >> there is no appetite for any intervention in this. one hallmark of the obama foreign-policy is not wanting to be entangled in the affairs of these countries and it is the legacy of iraq. they will be doing crisis management in order to avoid the full end. in syria we were almost pulled into something we didn't want to do so we will really try to put this fire out. >> rob, you are nodding. do you think this is wise to step back, almost laize faire? is more of a driver of what happens here than washington. given their situation and that they have other priorities, they don't want to lose sight on, it

is not surprising they will stand back and try to manage this. >> the markets -- we are negative eight right now, now negative five on futures. we are doing a little better. >> our twitter caption is appropriate -- our twitter caption is appropriate, is putin part of the solution or part of the problem? we want to hear your responses. >> we have been talking about how he wants to increase russian influence in terms of the soviet union, but they say it is more in line with stars than the soviet union. think you for joining us, the senior political analyst of barclays. we will be right back on "bloomberg surveillance" and talk about best buy earnings, better than expected.

♪ ♪ >> good morning. did feinberg, the federal executive -- special manager for special operations among many ideas. the perception of american fatcats. should the government take a cue from the swiss, and look at executive compensation? this was just voted us down and this is a hot topic in europe and the united states. how out of whack is executive compensation?

>> it is out of whack but what do you do about it? what i have learned in the treasury, every company is different, compensation culture is different. the strong arm of government, the obama administration never insinuated they should implement himself and to private pay. >> what should we do? >> rocket forces are the key and the sunlight. fcc wants compensation decisions open and transparent, everyone should know more about how these decisions are made. >> you and i remember when michael eisner got that big video payout, there was an uproar. a c classi get officers compensation with restricted stock, etc.? >> of the more sunlight and the more openness that you have as to how these decisions are theered, that probably is most the company can get -- country can do to influence the private market forces deciding

an appropriate compensation package. >> today, everyone has their fair share, some people work 70 hours a week. jamie dimon has earned this. don't they deserve free market force? >> that is free market force, but with enough sunlight, those forces may pressure somewhat of a drop. treasury,rned in the too often, compensation is a barometer of self-worth. not community or religion. it is looking in the mirror in the morning. i am with that type of money. >> is that the american psyche? >> it is, but it gets emotional when the government says, you are worth less and not worth this much. be prepared for pushback. >> is compensation on three or four or five years, do people hate that? >> people ate that.

but the total compensation of the executive compensation package being tied to long-term performance so your personal compensation is tied to the overall success or failure of the company for whom you work. is with us on a busy morning. we will go to provo, utah, g oogle glass. what about google fiber? changing the way that you are wired. with markets on the move, this is "bloomberg surveillance." ♪

>> good morning, everyone. "bloomberg surveillance," i am tom keene with scarlet fu and adam johnson. we are little bit better than we were at 6 a.m. this morning. robert kaplan is with us and we will talk about leadership with him. we talk about what you are really meant to do. today, it was to tie the bowtie. , the kenneth feinberg

second of of compensation at treasury. -- executive of compensation at treasury. >> the russian flag is flying at the parliament building following a day of skirmishes between pro-and anti-russian demonstrators. peninsula is a place where russia is spot -- russian is spoken and they are supporters of moscow. a bill has been vetoed in arizona, allowing business owners to discriminate on their own -- to deny service on their own will use believes. opposed this and many companies said they would leave if it became law. caloriewill require counts to be in large type. much new report on how sugar has been added, and serving sizes to show the larger portions people are eating.

these are the top headlines. >> best buy results came out in the hour and the stock is trading higher. investors like what they heard. estimates andng revenue is slightly lower than what analysts were looking for but most of this was pre-announced. buy increase their cost savings to 765 million more than 700 65 million. you look at the turnaround effort that best buy has in front of it. usually the ceo focuses on show roaming and taking advantage of their position but it does not seem to work here. >> they are shutting down some of the big box stores to try to module i some other distribution, and take into account the fact that they are losing a lot of customers to online. and they were also smart to announce bad news in january and

get it out. they announced the bad news and now the stock is at $20 or $29, this reflects a lot of the -- $28 or $29, this reflects a lot of -- how they have dealt with this so far. >> the stock was down with about one third when the pre-announcement came out. >> they had a rough 2013 overall. best buy and any brick-and-mortar retailer really needs to improve customer experience and give people a reason to step into the store. what company has done that well? all retailers face challenges. >> all brick-and-mortar retailers, macy's has done well. they have improved customer service and have also dramatically beefed up their online presence. most retailers have to go both ways, improving the customer experience and cut costs.

and they have to increase their online capability. >> how does an executive communicate to his staff that is being bounced around. i think of best far more than jcpenney. do you believe in walking the floor or is this a joke, given how serious that these events are? >> all retailers, and terry lundgren of macy's is a great example. they talk excessively about the customer. how do we serve the customer? >> how do they deal with the employees? that,e people understand employees understand they have to provide a better experience. they understand they are doing more online and this is all about serving the customer. you have to start with that and if you do that you can start the rational approach. >> ken feinberg -- they are really listening to the electorate. .> no the answer is no.

>> here is that i think you have a definite opinion of. properly incentivize a manager coming in to best buy. stock options, six months, two years? >> he made $500,000 in base salary, a total of $19.5 million. his stock awards and a bonus of $3 million. >> this was one of the best stocks when everyone gave a vote of confidence. how do you incentivize someone like joly? >> you tie that compensation package to long-term performance. and then you pay off in stock. this is what we do. or four to wait three years before you can redeem that stock. what is the value of the stock and how are you performing? tie that compensation directly to objective profitability.

or the lack thereof. and that way you are incentivizing that ceo or that top corporate official to the company long-term performance. >> the stock price when the person comes in, is this with options? what is the most equitable way? >> it did not allow options. we had the stock price on day one, and from your number one, you could cash in. to $40,buy, from $15, and today he comes back, $27. at seabreeze they reaffirm grim view, not to believe the tesla story. is elon musk for real? >> of course he is real. sure he is for real. this is an incredible what he has done. how much would this company be worth. >> they have requested about the share price violations.

it is not just you. we have much more with robert kaplan. utah,l talk about provo, and google fiber, coming to a town near you. next on "bloomberg surveillance ." ♪

>> it is a polar vortex. no, it is actually a gorgeous morning, in new york city, but cold. and we look for winter to continue on sunday and monday. spring is trying to happen and

the days are getting long. >> spring-training right now? >> the yankees are looking at a last-place finish and the mets -- and hockey starts again. >> this is "bloomberg surveillance," i am scarlet fu with tom keene and adam johnson. some company news, we start with jcpenney, reporting annual revenue and expansion. they see growth of the mid-single digits. they say growth margins will increase differently. the ceo believes a turnaround will be completed this year. as sales its rivals surge in asia. they posted growth of 10% and $4.5 million last year. -- $4.5 billion last year. sales rose by single digits in the u.s. but had double-digit growth elsewhere. don't take jamie diamond literally. the chief mentioned the weather

when talking about trading with investors. analysts jumped on that remark for the recent movements in coal. but basically said that market him credibility was unpredictable. >> google fiber is a high-speed internet access that is said to leave customers in the dust. cory johnson takes a look at how this thing actual work's. , a new -- ater speed, -- unprecedented speeds. the cable modem is 10 megabits per hour, google fiber is 1000 megabits. files,aster than verizon and faster than at&t's experimental offering. and time warner cable.

it started in kansas city in 2012 and now is in provo, utah. to 34 wants to bring this more cities. how does this work? modems, and routers and including optical networking signals in each customer's home. it could cost google $900 per year,old, $3 billion per but if google will build it, will customers come? there could be 20 million broadband customers who will come, giving google fiber nearly as big a customer base as comcast's when he 4 million. >> rob kaplan, you are fist bumping over this. it is coming to kc. you like it. >> i like it. there is a lot of buzz about it in kansas city, it is one of the

more exciting things that have happened since the chiefs won the super bowl in 1969. it is a great thing, on a more serious note, and i think that this makes a competitive difference for your town. >> does this render verizon and at&t old hat? >> time will tell, but this certainly puts them on the defensive. y, ineed some affluenc sniffing it enough population to buy the product. >> within that, what are they waiting for? they are google. why are they going from city to city? why not hit 10 cities at once? >> it is expensive. >> but brian roberts knows that. >> google has to be judicious and they want to see what the customer update is in each of these cities. >> it is incredible when you

think about, you walk down the block in new york city, all of those windows, you have to get a separate wire and everyone of those apartments and get them to sign on, this is incredible. >> i had this conversation with dennis leibowitz. you, manyd to tell decades ago. this is in the past but this is outrageously expensive. >> this is crazy. you have the copper line, and i time warnerith cable and i have to do this with google? >> this weekend i will get rid of my zenith, and the rabbit ears. kenneth feinberg, thank you for joining us. scarlet, you have a look at a busy day. >> we have global goods at 8:30 and we close job -- weekly jobless claims, not far away from the record high. at the moment futures indicate

that stocks will open somewhat lower, because the futures are down by almost five points. down0 year yield is 2.637%. and not just treasury's, but the yen as well. >> good morning, everyone. "bloomberg surveillance" on bloomberg television and radio, and on your ipad, on iphone, and on android. i am tom keene with scarlet fu johnson, of the harvard business school. the describes his expertise in thinking about leadership, and his book, "what you are really meant to do." >> google is clean for the fences with google fiber, which is up and running and so -- a couple of cities and they will launch in 34 more cities this year. utah,ohnson is in provo,

the only city other than kansas city where this is offered. why does google want to get into the heavy lifting, highly regulated world of being an internet service provider? >> this is an interesting business that place of the strengths of google, understanding networks and getting signals from one place to the next and using the bandwidth that they already have, going back and forth across the country. it is actually very clever. the speeds at which this service work's are so far and above what the other providers, like comcast and time warner cable are going to be able to provide. this is a different order of business, offering the opportunity for google to be in those businesses and not take the wire carriers out. >> google is proud -- planning to expand the 34 more cities, there are cities who want to

compete for the service. how does google decide which cities it will do this in? >> there are a lot of cities in america that have spent money at to end of the .com bubble install fiber throughout their cities. provo is one such city. i spoke to the mayor, talking about the impact of having this. this is 100,000 times faster than the average download. with that speed internet service, what that will do for the community here in provo. note have no doubt that only business but community involvement and health care, we are starting to see an excitement and a buzz in potential and what this could mean and what we could do, and obviously we have not been here long enough to have concrete results but based on the buzz this is good. >> the experience in kansas city, the only place to have it

so far is very dramatic. they talk about people coming from all over the midwest open a businesses in kansas city because of the speed of the internet service. they actually sided google fiber googlereason -- cited fiber as one reason things in kansas city have gotten better. this plays on something they already have and changes the business community to where they are going. >> thank you very much. cory johnson in provo, utah. and oner correspondent of the stars of "bloomberg west." give up a lot, kansas city gave up many concessions. are they giving away too much to give away -- to get some future competitiveness? >> in the previous segment you talk about infrastructure and the huge infrastructure need to spend in the united states. this is just as important as

roads and highways. i would argue that this is more important in the world we are moving into. cities like kansas city decided it is worth it. of harvard business school and the former vice chair of goldman sachs. how do you balance the cost, the massive cost of doing something like this with the payout? >> you have to estimate the potential user base. how many users are you likely to get through -- get to over a number of years. google realizes when people use this, it becomes a competitive advantage. >> what is a reasonable number of years to expect the payback? four or five years or longer? >> the short answer is they think over 3-5 years. things work so quickly in this world that they think three or five years, it will pay for itself. >> we have much more with robert kaplan of harvard business school. goldman sachs said the cost of a

140 -- national rollout is billion dollars. rubble is four ukraine -- >> we will be back with tom keene, adam and myself. ♪

>> good morning, everyone. "bloomberg surveillance."

i am tom keene. adam johnson, scarlet fu, and -- we have three top photos this morning. >> there is a theme here. the top stories of the day, a man sleeping at the barricade near the dynamo in kiev. that is after armed russian government overtook the russian headquarters in the region of crimea. you can see that at the headquarters. >> what this will do with the economy -- when the currency going the way it is, there is a true evaluation. >> this is about 30% and there is a lot of angst and uncertainty. on the other side of the spectrum, look at the interior of former ukrainian president yanukovych. that is a white piano.

that is gross. piano, that is like a stretch limousine. >> that is out of vegas. >> the estate said that interim turchynov is looking for assistance -- it looks like he had pets and all kinds of cars. there is a gold queen next boss like at tyco. tyco.enex box like at a strange item was found in the home of former president yanukov ych, with a picture of united states president lincoln. this is curious. >> this is not leadership when you have this kind of opulent display. for any leadership under any government, it does not work in this modern day. >> if you're not serving the people you will be out of business. >> this is the new media and the

twitter vigilantes. >> you have to add to the facebook people of the country. >> the galaxy is more crowded than we thought. nasa has discovered 715 more planets. the biggest single discovery of planets in history. to put it in perspective, before wednesday we knew about 1000 planets. these were discovered by the cap space telescope -- keppler space telescope. this is not bad for a government agency that has had its budget slashed. >> 300 of them have all applied to harvard. >> unlike a dartmouth, where applications were down. >> you can tell money can what they did at dartmouth 46 years ago. we are way behind this. progress.ological >> universities in this country are one of the great strengths of the nation in terms of

biotech and scientific research. this is one of the great strengths of this country that we should foster and be pleased about. >> what about tuition? >> this is a problem and it will come down, it has to. you will see disruptive forms like online, competing. >> robert kaplan of harvard business school. coming up, we discuss crimea and theukraine, 121 taking over parliament building iiin crimea, next. ♪

>> good morning, everyone, "bloomberg surveillance." an important guest an interview tomorrow. he is worried about inflation. will join us of the philadelphia fed. he will express his concern about the yellen consensus at his reserve. >> this is "bloomberg surveillance," i am scarlet fu with adam johnson and tom keene. of guest is robert kaplan, harvard business school and the author of "what you are really meant to do." investigating

possible security breaches at 2 retailers, this is similar to what took place at target and neiman marcus last year. huawei,rediction from the chinese filmmaker says they will sell 100 million units, the second strong year of strong growth at huawei. last year there was growth of 68%. the push for smartphone users is baidu, who sayt that revenue will reach $100 billion as advertisers spend more to reach mobile phone users. that is the latest from the files of "bloomberg west." crimea. watching >> ian bremmer with the asia group is looking at the entire region. from brussels to moscow and the effect on the ukraine. and of course, the foreign

response including the united states. dr. bremmer joins us today. what are you focused on on the cacophony of news, what is your group focused on? >> it is still very much russia versus the west. the ukrainians need a lot of money. you have an eye on that process that is in place, the americans are willing to provide cash but well short of what the ukrainians will need to keep afloat. the russians think they will be part of that process. a lot of folks think this is a good sign, for influence to make sure that the imf does not give cash to the ukrainian government. it does not reflect the entirety of the country. do, the russians have another reason to complain including the big news that the military movement is in and around crimea. let's do you have a handle on is, withputin, who he

the council on foreign relations, do you have a credibility about how mr. putin will behave? >> the decision -- the interesting thing about rush is the decisions are made by one person. he has gutted institutions so they report directly to him. there is not a lot of consensus or input, but very clearly this is a guy who believes in russian greatness in the region and is not under domestic political pressure. he is prepared to go to the mat near term or long term for territory he truly believes that is his. he did that in georgia and it makes every bit of sense he would do that in the ukraine. the question is how far he will go in the near-term. what happened around crimea raises the likelihood that we could see some form of direct succession that would require the russians to come in and defend.

you mentioned the military exercises in the possibility of russia coming in and having to defend. what is going behind the scenes, officially, and how is vladimir putin likely to respond, diplomatically? >> what they're waiting to see is what kind of government you are getting from kiev and what they are likely to do with the territorial integrity of the country and how much weight that the russians will have in that country. what they have put together in this new cabinet looks like a russia,o-european union this is not the unity government which was the agreement that was signed when? yanukovsigned when ych was there last week. they are moving to declare their independence, they have not done that yet but they are moving to that. if that happens, the russians would clearly say that we have to defend our compatriots that

are being mistreated on the ground. and so far, what we see his ex collation. we see military exercises and sending additional ships. >> i understand why crimean big, but theld be ukrainian treasury is dry and needs money. if it was the russian trade deal that brought this to the head, why would they go back to russia for more money as opposed to the imf? >> they won't, that is part of the problem. the unity deal that was signed last week and abrogated almost immediately would have had the russians and europeans putting cash in place as the ukrainian opposition, the hardline in the ukrainian opposition strongly opposes that. that means on the economic front the imf has to do it all. them -- ii don't see see the moving quickly but i don't see them filling 100% of the gap.

, thank you for joining us. robert kaplan is here from harvard business school. i go back to diplomacy, showing the flag and the secretary of state, does that work anymore in this modern age? >> it worked but you have to be careful in a fluid situation where there are number of parties that are driving this away from us. you are better off watching the events, being prepared and not saying something or doing something that will make matters worse so that is why i think you have seen a wait and see approach from the u.s.. inthis is like khrushchev the 1960's, the speed of media is important. >> you have the interim prime minister posting on facebook as to what happened in the raid. we want to bring in the twitter question of the day. is vladimir putin part of the solution or part of the problem? putinswers here, vladimir

is always the problem with eastern europe -- he is the only one who has a possible solution to the ukraine , back off, usa. done ated states has not lot, as robert kaplan put it. the final answer, he will have to be the solution for the next ukraine government and he is glad this to not happen before the olympics. robert kaplan, the markets are not really responding to what is happening in the ukraine. >> the markets are behaving on the margins that this will be contained. that this is not going to escalate into a broader crisis. normally, when the markets make these kind of judgments, on occasion they are right and on occasion they are wrong. they are assuming this is going to get results. >> this brings us to the agenda item, the yen. >> this is the global business paper we are watching. there are number of indicators

but with a weaker yen, 103-105 per dollar, the fear comes in and we go down with a stronger yen, racing through this morning at 184. as robert kaplan said, there is a quiet out there as we -- from headline to headline. >> this is effectively people taking off the carry trade and shorting the yen, they reversed that. >> and there is the 10 year yield in the u.s. as well. >> my agenda item is janet yellen, who will testify before the senate banking committee. it was pushed back because of the snowstorm in washington. robert kaplan, when you look at leadership she has big shoes to fill following ben bernanke. >> we will get more tomorrow .ith charles plosser >> she has a directive to keep this taper going if possible.

i have a historically unusual policy and they have to start withdrawing from it and you will see that she will be determined if the markets allow for this taper to keep going. >> the market points, she will try to figure out to continue the taper or slow it down. durable goods and capital goods orders on my agenda. washinggoods, dish machines and other durable goods are down, and capital goods are what companies are buying and those are expected to be down to tens of one percent. >> absolutely fantastic. we need to say thank you to our entire team as we continue "bloomberg surveillance." >> people listening and watching don't understand -- don't realize that there are two dozen people behind the scenes. >> they should be working on the ukraine. robert kaplan, thank you very much. comeback on a slower news day in 2016. >> "bloomberg surveillance"

continues on radio, we will break the numbers that adam was just talking about. loop"erg's "in the continues with alix steel and betty liu. ♪

>> good morning. to friday.ay closer

here are the top stories we are following tomorrow. the world's largest finance retailer posting fourth-quarter earnings that beat estimates. best buy also has put in a price matching policy so it could compete with amazon.com. meanwhile, the holiday shopping season did not bring joy to sears. sales there are plunging, leading to another big law. 368 million dollars. federal reserve chairman janet yellen was turning to capitol hill in a couple of hours. she will testify before a senate committee on the economic outlook and monetary policy. peter cook is on the hill with more. will he get any different message from yellen today given a two-week